SEOUL, Feb 22: South Korean households’ disposable income grew at the slowest pace in three quarters as consumption remained weak, suggesting that domestic demand has yet to recover as global growth remains muted.
The average South Korean household saw disposable income rise by a real 3.9 percent in the October-December period over a year earlier, Statistics Korea data showed on Friday, the slowest growth since a 3.7 percent rise in the first quarter.
The annual growth in disposable income – total income minus spending on non-consumption purposes such as tax – slowed for the first time in seven quarters.
From the same data, South Korean households’ spending on consumption fell a real 0.3 percent in the December quarter from a year earlier, compared to a fall of 0.7 percent in the previous three-month period.
Disposable income for households grew a real 4.1 percent in the entirety of 2012 compared to a year earlier, the quickest growth on record since the government began its survey in 2003 and compared to the average yearly growth of 1.4 percent over the previous eight years.
The income growth took place as annual consumer inflation remains well below the central bank’s target and the economy continued to add jobs. But growth for the quarter stood at 0.4 percent from the previous period in seasonally adjusted terms, suggesting weak economic momentum.
Meanwhile, a key consumer sentiment index from the Bank of Korea rose to its highest in eight months in January, raising hopes for revived consumption in Asia’s fourth-largest economy. The central bank and government both expect the economy to recover this year compared to 2012, albeit at a mild pace. (AGENCIES)
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